Cap-and-Tax is a Jobs Destroyer: Part 1 in a 10-Part Series

Policymakers in Washington want to dramatically change America’s energy policy by regulating carbon dioxide emissions. Their most popular idea, included in the Waxman-Markey 2009 energy bill, is a cap and trade proposal.

Many Americans find the debate in Washington over adopting a cap-and-trade program to reduce carbon dioxide a bit confusing. It works like this: Policymakers set a cap on the amount of carbon dioxide and other greenhouse gases that can be omitted into the atmosphere. Each power plant, factory, refinery, and other regulated entity will be allocated allowances (rights to emit) six greenhouse gases. However, only a certain percentage of the allowances will be allocated to these entities. The remaining percentage will be auctioned off or distributed to other emitting entities. Most emitters will need to purchase at least some allowances at auction. Emitters who reduce their emissions below their annual allotment can sell their excess allowances to those who do not–the trade part of cap-and-trade. Over time, the cap would be ratcheted down, requiring greater cuts in emissions

Put simply, it’s a tax on energy consumption. In fact, it would act as a huge tax. If enacted, cap-and-trade will be one of the government’s largest revenue sources within the next decade. Since 85 percent of our energy demand is met through fossil fuels, increasing the costs of energy will have significant economic consequences.

Most notably, the cost of producing goods for businesses increases, and consumer demand falls for two reasons; price hikes on goods reduce demand and people have less disposable income due to higher energy prices. And since low-income households spend a larger percentage of their income on energy, higher prices hit the poor much harder.

From an economy-wide perspective, higher energy prices force businesses to make production cuts and reduce labor. Furthermore, as we see in the current recession, reduced consumer spending only exacerbates this. The overall result is increased unemployment and slow economic growth.

What about green jobs, the supposed solution to our economic woes and environmental concerns? Sure, we can use government (read: taxpayer) money to hire workers to build windmills and solar panels. There will be green job creation. But that’s only one side of the coin. Despite years of subsidies and special tax breaks, renewables provide only three percent of the nation’s energy generation. Even after taxpayer-funded subsidies, consumers must pay a premium on their energy bills for renewable energy. Consumers lose doubly, paying to fund these projects with tax dollars then paying for pricier electricity.

It’s also worth noting that jobs are good, but they are not the end all goal. A business could hire a person to dig a hole and fill it up for eight hours a day, but how much value is that creating for society. Most people would argue not much. The big problem is resources a firm (or the government) devotes to a project like this cannot be used elsewhere in a more productive manner. Not only could the labor be used elsewhere but the firm could have used its money on a more productive project – although if a business is hiring someone to dig and fill up a hole, they probably won’t be in business for long.

A cap-and-tax has a number of problems, which will be covered in a 10-part series of blog posts, but above all else, it’s a jobs killer.

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Americans have already seen the effects of what 'cap n trade' would be like; last summer's huge spike in oil prices forced many (like me) to park our cars and trucks. And with the recession and our business-landscaping-down significantly, I couldn't afford to put the gas in my truck. I had to buy a small motorcycle to commute. Now I greatly benefited from the cost savings-it only costs me about $10 a month. But what about the millions of Americans who can't use a motorcycle for their main transportation? What about farmers? What about cab drivers? What about truckers?? They've been getting killed with high fuel costs for years.

This 'cap n trade' nonsense will force a vast majority of Americans to park their transportation. And that's not mentioning the jobs they're going to lose because of this craziness restructuring of our economy.

The GOP must get the news out there about the massive job losses and skyrocketing energy prices that will kill 95% of Americans' ability to work and live their lives with normalcy…the very one's who Barack Hussein Obama claims to be the sole protector of. And this is all on top of the "worst recession since the Great Depression!" Okay, so "why" is this such a good plan for America sir??

If Carbon dioxide is a poison as Harry Reid and other Democrats tell us, what is it doing in our childrens' soft drinks?

If CO2 is a poison, why is it that I can purchase unlimited quantities of dry ice made from CO2?

If Carbon sequestering and underground injection is the salvation for electrical generation from coal under the Obama-Democrat's Cap & Tax, why is it safe to store CO2 underground but not nuclear waste underground in Yucca Mountain?

My point is that it is silly to call CO2 a pollutant. It is silly, costly and counter productive to attempt to sequester and store CO2 from coal generation as it is to deny using a safe storage site for spent nuclear fuel rods.

But the Democratic controlled Congress wants us to believe that the limits that they seek to place on us will not waste money or cause more energy production. They base the justification for more government control not on sound science or the Laws of Thermodynamics but on shear flim-flammery and hysteria about drowning polar bears.

I now understand how the citizens of 1930's Germany could allow a mad man to come to power and destroy a country.

My strategy for dealing with a "market" of Carbon Dioxide credits is to discredit the market. Conservatives should announce today, their planned intentions to repeal any and all Cap and Trade license fees. That threat should overhang the market for as long as the Democratic party controls and as long as a Cap and Trade system in in force. Repeal would provide zero compensation for people holding credits. [It will be interesting for someone to try to prove in a court that a "credit" has any value other than fictitional value defined by a Democratic party.]

The biggest job killer of all time has been "Fair Trade". Now days, we are net losers to the tune of 800 billion dollars a year. Imagine what a great stimulus 800 billion dollars every year would do for the American economy.All we have to do is begin producing for our own needs. Imagine if you can — a self sufficient America!!!

As for cap and trade, it will be a complete disaster if we do not require it from the other trading countries around the world. Fair wages, the American standard of living, child labor laws, ecological concerns and a myriad of other laws have been ignored in our "Free Trade" agreements. Is it any wonder America is in such dire economic condition while failing to "COMPETE" against the rest of the world? What a scam!!!

The main thing isn't global warming. It is dependence on foreign oil, and dependence on a non-renewable resource. There is a need in some time frame to move away from oil, and eventually from coal. If the only problem with oil were price, then it might be adequate to simply allow price over time to drive the change. But, being a strategic resource it may be advantageous to promote this transition more quickly with cap and trade or some other policy. Cap and trade is probably one of the better choices if man made global warming is a real threat, otherwise something that isn't so carbon focussed is probably better.

The goal is of course to avoid a problem bigger than the one the author is identifying. And the problem the author identifies is probably not as big as he suggest because of the efficiency of the market in finding economical ways to replace oil if necessary. Even if there is increase in cost, it probably isn't nearly what he is suggesting, especially considering the alternative of oil price increases with time.

The worst-case scenarios of the IPCC and other models are unlikely. Yet they are not trivial either. And if there is even a small but more than trivial possibility of catastrophe, then wouldn't a sensible cost-benefit analysis call for doing something about it.

Whether there are historically high levels of CO2 being emitted and accumulating in the atmosphere, and whether this causes some rising global temperatures, is really not opne for debate. But whether this will lead to catastrophic consequences, whether the earth has a check in its natural cycles that will prevent temps fromn getting too high or that will blunt the most severe effects, is still open for discussion. Also still debatable is the best course of action to take to reduce GHG emissions.

Rather than being completely obstructionist (no cap-and-trade or carbon tax legislation, and no regulatory limitations), it seems to me we should be working to make the comprehensive scheme as less painful as possible. Look, the current system isn't working for the industry >> there is such organized opposition that all new permits are being challenged. Permitting agencies are (as of last November (In re Deseret)) required consider whether a new or modified source has adequate GHG controls. And, even if the source shows some technilogical controls, there are absolutely no standards. So the permit can still be denied (a la the Sunflower plants in Kansas). And even if the permits are issued, the entity will get sued (every coal-fired plant in the conutry currently has a boiler, a smokestack and a lawsuit), and the court could pull the permits (a la the Longleaf plants in Georgia). And even if the entity spends years and millions of dollars to get thru these obstacles, there's a public relations backlash (a la Dominion in Wise Cty Va).

If there is no comprehensive legislative scheme, EPA will regulate emissions. No one wants traditional Clean Air enforcement (with the mandated BACT and per day / per violation penalties). And this isn't because the EPA under Obama is now all whacky. It's because the Supreme Court in Mass v EPA in essence mandated the endangerment finding of a few weeks back. As long as Marbury v Madison is still the law, it is for the Supreme Court to say what the law (in this case the Clean Air Act) says. The Supremes said that CO2 is a pollutant under the CAA definition, and that EPA had the authority to regulate it, and the EPA had to regulate or explain why it was refusing to make an endagerment finding. The EPA stalled as long as it could.

So rather than fighting the inevitable comprehensive scheme and trying to prop up what has become a broken system, we need to be working to make the scheme as palatable as possible. This means more allocations than auctions, at least early on. This means gradual phasing in of the most stringent caps. This means broad use of offsets (to include sequestration and forest management and sound ag practices, and to include foreign projects as well). This means directing whatever is raised either directly back to low- to middle-income consumers, or to the most heavily affected industries and/or regions. If we keep banging our heads against the obstructionist wall, we're not going to have any say in what the comprehensive scheme will look like.

C&T is as much about climate as Iraq was about terrorism. Real reason is to regain competitive advantage via 'Green Protectionism'. This creates the format for it. Talking points are as fraudulent as Barnie Madoffs.

There is no Global Warming! Oil is not a fossil fuel! Cap and Trade is designed to remove our Constitution and Bill of Rights and make America part of a "One World Nation", whatever that is!

Truth be know, remember when the "Government" told all of us that we could no longer use "Freon" in our refrigeration and air conditioning? Well guess what? Freon is an Element, comes out of the ground all the time.

The actual reason for the "Government" needing all the Freon was for the Space Shuttle to help cool the Tiles. It works exremely well. As to the effect on the Ozone layer? Who knows? But if you check out the original designs of the shuttle exterior re-entry cooling systems, it takes massive amounts of Freon, and "They" needed it more than "We".

What I never have understood, is why "They" cannot just tell "Us" the truth sometimes!

The article omits to mention the number of conventional jobs that will be lost and not replaced with green jobs. The push to smaller cars will mean fewer jobs in Detroit and in satellite industries. In fact, we have already lost thousands of jobs in the petroleum industry because of our restricted drilling policy and effective ban on refineries. So we are subsidising other countries to create those jobs that we could have had here. The restriction on oil fed the $4 gas price that shut down the SUV and truck market. New Process Gear laid off 10,000 workers last year (make 4WD gearing). GM is laying off thousands. Etc. All because of what our essentially fascist leaders are doing to us. Now, with the restructuring of GM and Chrysler the Government will force it to make small cars that require less labor and fewer jobs. All from the same mentality that drives cap and tax.

Are we going to be taxed for exhaling CO2? In the 70's Sacramento was beastly hot in the summer. It still has hot days, but they are random. I think it is a lie that the 'global' is warming. I also think we should find some sane people to elect to Congress, but we can't go by party–only by scrutinize who's out there and pick non-Gore candidates.

Kevin, are you and your family prepared to pay $3,000 to $4,500 more in energy costs per year? Because that is what cap and tax will cost the average American household. My family will not be able to afford it. This policy will force people to cut back on or do without air conditioning and heating. We will be using candles for lighting and fireplaces for our main source of heating. Cap and tax is just a huge government scheme to increase taxes on the basis of unproven theories.

Cap it means park your SUV. We the government, who own auto manufacturers [or will] will tell you what to drive [and what to eat, wear and breathe]. Pretty soon, the matchbox cars will be the only ones made in America. Then turn your light switch on at home and leave it on for too long and get a call from Algore. Is that what Obama voters wanted? The SmokenMirrors guy probably did. He probably lives in a tree and should stay there. Who has proven Global Warming exists ? Here Boxer Land, on the left coast, it is cooler than normal.

Ah, the logical fallacy of the Heritage advocacy of the free market. They don't want the government to interfere with the free market, because the government only creates problems.

So, the government must not create scarcity on the amount of pollution one can create by burning oil because any limit on burning oil will kill jobs.

The next thing that logically follows is that the government must not restrict the supply of oil. Therefore, since the private land owners have pumped their oil dry, the government must solve the problem by supplying the market with ever more oil, either by giving private parties the land of all the people, and they can't charge the price a private party would, but instead give it away for free.

And when that land runs out, the government must invade to capture more land and its oil.

Right, government is the problem if it doesn't make sure it supplies the free market with resources like an infinite supply of oil.

But nature trumps the Heritage ideology – nature places limits on things and if the market can't deal with the scarcity that limits bring, then the free market needs to be replaced with communism.

I love the conservative philosophy: We must not help the environment because it may cost people jobs, even if it means destroying the planet. Remember, if business is good, then everything else will be okay. Don't worry about global warming or the melting polar ice caps, it's not like we would want to leave future generations with a nice, habitable planet. This disgusting display of greed is exactly what is wrong with this country. You people need to stop listening to Hannity and Beck.

The accusation that 'tea bag holders' are just haters of Obama, blacks, or Democrats is not true. I was a tea bag holder but I also held a sign that stated the following:

1. Follow the Constitution and Bill of Rights

2. Utilize nuclear power

3. Utilize coal-fired power plants

4. Obtain off shore oil

5. Utilize shale oil

6. Support private enterprise

7. Maintain our military strength

8. Maintain right to own guns

Do these items relate to color or political background?

Obama has stated that he wants to shut down coal-fired power plants. I am a retired Mechanical Engineer with 34 years in power generation and wind and solar power cannot fulfill the normal requirements for a major source of electrical power because the required reliability does not exist.

I request that at the next 'tea bag holders' meeting we hold an empty gas can with an empty wallet attached because that is where we are headed.

Unfortunately, everything we know about atmospheric physics (the same physics that helps us understand and develop our technology) tells us that global warming is indeed real; and unless dramatic changes are made to our power-production processes and transportation systems, will lead to a 3-degree Celsius increase by 2100, and more beyond. This will have extraordinarily negative consequences for life on this planet.

No one has claimed that CO2 is a toxic gas. However, the increased acidification of the ocean seems very likely to do serious damage to coral reefs (upon which a lot of fish populations depend) as early as 2050.

The incremental cost of taxing CO2 does not begin to approach the cost of trying to find a new working planet.

I see the Democrats are pretending to address the green house gas emissions problem through legislation involving carbon taxes, “offsets”, emissions trading and other similar quackery actually only designed to raise more money for the Federal government.

As usual, the self-serving politicians and lobbyists conveniently ignore the actual problem. Namely, older inefficient coal plants that are grandfathered out of modern emissions regulations (including greenhouse gases) while providing huge profits because the ancient assets have no debt. This advantage effectively stifles the building of cleaner replacements.

Phase out the older coal power plants over time by imposing a fee on plant owners. Here is how:

By way of a background, power is routinely bought and sold in the marketplace, with Regional Transmission Operators (RTO's) managing the process. Basically, these existing federally authorized organizations are already heavily involved in managing the day-to-day market price of power, including the various contracts between producers and buyers of power. Simply put, the RTO’s (through computerized models) cause the price of power to be set and also facilitate the payment process through their computerized system.

The unique position of the RTO means they can easily set a sliding fee that is deducted from the contract price paid to the generators. Only requires relatively minor changes in their existing computerized system to identify power plant CO2 emissions. That’s not difficult as emissions are basically determined from plant efficiency and fuel type and thus simple relationships can be used; do not need to actually measure the “exact” amount of CO2 emissions.

The RTOs, which are not government agencies, already add fees to contracts.

The only real need is enabling federal and state legislation to put this simple mechanism in place, including the escrow accounts used to make low interest rate construction loans to new power plants (or efficiency improvements) that significantly reduce green house gas emissions. Over time, the older plants would be phased out because they could no longer compete in the market place.

Please don't let it get out that for every breath we take, we exhale CO2. Are we going to stop humanity from breathing? This is how ridiculous Global Warming is. So CO2 is a poison? What are they teaching in science? There are no rational ways to measure levels because CO2 is part of the air around us. This is just a scheme to gain power, tax us into submission and destroy the economic base of our great country.

[…] and Trade Is a Massive Energy Tax 2. It Will Not Make A Substantive Impact on the Environment 3. It Will Kill Jobs 4. It Will Cause Electricity Bills and Gas Prices to Sharply Increase 5. It Will […]

Speaking of energy and jobs, the No Cost Stimulus Act of 2009 (H.R. 1431) is a comprehensive plan to develop energy independence for the U.S., create jobs and revenue, and thus improve the economy, without raising taxes. It must be a good idea because former U.S. VP Al Gore and his friends have come up with a counterfeit plan, the Clean Energy Jobs Plan, that looks very much the same, but isn't.

Before the industrial age when, supposedly we started pumping copious amounts of GHG into the atmosphere, the levels of CO2 were markedly higher (look on http://www.icecap.us for more info) and the earth did quite fine. It stands to reason that if CO2 was bad for us (and plants) there would be manifestations of it by now. Truth is that higher CO2 would very likely be good for the plants leading to greater growth rates, greater crop yields—it certainly couldn’t hurt plants since it is what they “breath.”

As for the globe warming; ice core samples show that the earth goes through warming and cooling periods—it’s natural. Let assume we stop the globe from warming and actually send it into cooling faster than it already is; who of us is going to be around to explain it to the generations that live 500 years from now? Record snow falls, shorter growing periods, higher heating bills … that’s what global cooling will get you. Sure we may get to a point in the next thousand years where the earth is warmer than it is today but the last thing I read was that best estimates by the IPPC was that by 2050 the earth could be warmer by about .5 Celsius.

If any of you in favor of more Gov Regulations (in the form of cap and trade) think that the “big bad” oil and coal companies are going to take it on the chin and get their “just desserts” think again…the consumer will always pay for these increases in the end. If the companies can’t make a profit or people won’t pay the higher prices the company will fold up tent and go somewhere else and start up a new business…the only one who will win is the Gov, albeit short lived because they will have killed the golden goose.

[…] Foundation A 10-part series courtesy of the Heritage Foundation. Recommended reading. Part 1: Cap-and-Tax is a Job-Destroyer Part 2: Cap-and-Tax Will Force You to Make Budget Cuts Part 3: Will Cap-and-Trade Save the […]

[…] place we could start would be asking is it worth spending 2,000,000,000,000 dollars, sacrificing millions of jobs, raising the taxes of every American family by $4,000 a year on a policy with no measurable benefit […]

This administration has only one goal in mind…economically ruin the USA. The health care bill (that the majority of AMERICAN citizens do not want) combined with the cap and tax iniative, the bogus climate change, not renewing the

Bush tax credits, etal, etc. etc. Break the American taxpayers back to become totally dependent on the government? Sound familiar? Look back on history. Democracies are ruined and dictatorships are established!!

Elections 2010 will give a chance to turn our government back to the people. Everyone neesdsa to look at their senators and representatives and evaluate where they stand on health care, cap and trade=tax, and upholding the national law on illegals living and working in our country. It has to stop somewhere or we are doomed.

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